Affordable Housing Trust votes to extend $$$ in

HARVARD — Following a closed door session Monday night, the Harvard Municipal Affordable Housing Trust (HMAHT) voted unanimously (6-0) to financially participate in an eleventh hour search for a solution to forestall foreclosure for the town’s two affordable housing complexes. The Great Elms on Stow Road and the Harvard Inn on Fairbanks Street were slated for back-to-back foreclosure auctions on Thursday, Dec. 8 by note holder North Middlesex Savings Bank.

Through Monday, MHAT had $355,197.71 in unencumbered funds at its disposal. When the doors reopened, members would only say that some portion of its funds would be used towards the foreclosure bailout, indicating it’s too soon to say how much until all interested parties belly up to the negotiation table.

Selectman Ron Ricci, who sits on the MHAT board, suggested the group enter executive session to discuss the purchase of real property which was agreed to unanimously. Ricci suggested reconvening in open session following the closed-door talks with Victor Normand, President of the Harvard Trust Non-Profit Properties which owns the two affordable multifamily homes.

“There may be a vote taken,” said Ricci, noting “People obviously have an interest…. It may be appropriate to make some sort of statement. Victor might want to take time to talk to his people, and to talk to the bank, but at some point in the very near future, we owe it to the public.”

An hour later, the doors reopened and Ricci announced, “We have an agreement for the [MAHT] Trust to proceed to hopefully forestall foreclosure on the (Harvard) Inn, and the [MAHT] trust is willing to commit funds to do that. Alot of this is subject to more negotiation with other parties.”

MAHT member Bruce Nickerson quickly added, “This will also forestall foreclosure on the Great Elms…We have voted to authorize the expenditure of some trust funds to achieve this if a satisfactory negotiation can be done.”

No dollar amount was disclosed. “We will let you know,” said MAHT Chairman Wade Holtzman.

The talks earlier included the Department of Housing and Community Development (DHCD), but Ricci said the next phase of bailout talks will include the Harvard Trust Non-Profit Properties, the Municipal Affordable Housing Trust and North Middlesex Savings Bank.

Normand was surprised to hear the bank told Nashoba Publishing earlier in the afternoon that was not interested in proceeding with Thursday’s auction in favor of a delay until perhaps late January. “I did not know that,” said Normand.

But the sense was of shared urgency between the camps was clear.

“We’ve been frustrated in that we have not seen any kind of viable plan at this point,” said Walter Dwyer, Executive Vice President and Senior Loan Officer at North Middlesex Savings Bank on Monday afternoon. “At this point, people are paying attention.”

“If we can get some monthly payments and they will commit to taking care of the tenants and the property, we’ll stand back for a while,” said Dwyer. A lot depended on the MAHT meeting, Dwyer said. But the bank’s patience is not infinite.

Without detailing all of the “legalese,” Dwyer said North Middlesex Savings Bank was willing to extend a “short term continuation” of the foreclosure proceedings until late January as long as there’s a good faith showing of a fix afoot. Not a cancellation of the foreclosure, Dwyer said the postponement would permit the parties to work out a solution without scrapping the expensive legal process the bank has already paid to proceed through Land Court.

“The expectation is we’re all talking to each other and trying to reach the best possible outcome for all parties involved,” said Dwyer. The bank doesn’t want to foreclose or be in the position of landlord, Dwyer stressed.

But the bank is in that position, said Normand. He said the tenants’ security deposits were held in escrow at North Middlesex Savings Bank, which Dwyer said was taken by the bank to satisfy unpaid municipal property taxes. Normand said that, if that’s true, the bank is ultimately responsible to the tenants for that money.

“It’s not our money. It’s money held in escrow,” said Normand. “If so, they’re exposing themselves to some serious consumer protection issues. They’re obligated to tell the tenants where the money is.” The law requires landlords to provide an annual accounting to tenants of escrow sum balances and interest accrued on the security deposits held in a Massachusetts bank account.

Normand said his group provided the bank with a tenant roster and amounts paid into the escrow account unit-by-unit.

As far as who is managing the properties now, Normand said “They’ve made a protective entry. I know it as ‘mortgagee in possession.’ They did it, reluctantly of course, by they did it- to their credit – to protect their investment.”

Normand said the wheels began to come off the wagon when the Harvard Inn faced the prospects of paying a sewer betterment to tie into the new downtown sewer system, now under construction right outside the Inn’s front doors.

“That really made us confront the reality of the condition of the property – when the town center sewer became a reality. It’s a big chunk of money and we had no reserves. Income was flat,” said Normand.

“So the first thing we did was stop paying taxes and then stopped paying the mortgage,” said Normand. “And we told the bank ahead of time that we were in that condition. We’re desperately trying to find a way forward.”

The fix clearly lies in some form of public subsidy, said Normand. “Affordable housing needs public support to make it work.” The business model is doomed without it, he said. Rents are fixed and therefore flat, while carrying costs and maintenance for historic homes that are centuries old rack up.

“Whether it comes from the town or the DHCD, federal funds, state funds – whatever,” said Normand. “No one is building affordable housing without support.”

In addition to the $277,000 loan from North Middlesex Savings Bank, Normand said there is a $325,000 loan made by DHCD for building repairs made ten years ago that is in a second lien position and suspended from repayments as long as the property is maintained as affordable housing.

$32,000 from CPC, please

To prepare for the Wednesday meeting of the Harvard Community Preservation Committee, the MAHT agreed (5-1) to continue to seek the $32,000 in applied for in Community Preservation Act funds it sought over the summer. If approved by the CPC and placed on the Annual Town Meeting warrant, voters would have the final say on the funding in the spring.

The sole no vote was delivered by Chris Ready, who said the MAHT ought to be applying for much larger sums than $32,000. “We’ve got to ask for more- much more- we’re supposed to be up to $1 million.”

Ricci suggested a last-minute change would likely “raise the ire of someone if you, on the fly, change your request…. It’s easier to change why you’re seeking the money than changing the amount.”

Ten thousand dollars was originally included in the request to hire a consultant to explore the problems at the Great Elms and Inn but that sum wasn’t expended. But costly issues related to the projects appear to be percolating.

Holtzman suggested one need may be relocate the tenants it a foreclosure and string of evictions proceeded. Ready said there’d be the need to replicate the lost 9 units in such a scenario, too.

MAHT member Mort Miller said the call for public assistance for the Great Inn and the Elms “goes well beyond this committee. We’re one committee in this town.”

“But we’re the [sole] affordable committee in the whole town,” said Ready.

“That’s true but it’s also a town issue,” said Miller. “It’s primarily a town issue. We happened to be a committee that has some funds that can be used for these purposes.”

“If this is a large amount, we’re talking the Annual Town Meeting regardless,” said Nickerson.

A fix requires ‘more than the seven of us on our committee,” said Miller. Ricci echoed, saying “formal buy-in from the town” is a must for “the nature of projects that we might engage in the future. We’d need to build a large consensus.”

Or Miller suggested tenant subsidies may be less expensive in the long run. “Ten thousand dollars for affordable accessory apartment (subsidies)? That would go a long way and much more than a building somewhere,” said Miller.

If any affordable ownership unit were to face foreclosure, the MAHT pondered if management companies could be employed to keep the unit on the affordable housing rolls. The group said another approach to spur the creation of affordable ownership opportunities may lie in the offering of subsidies for each affordable unit built

A $200,000 MAHT grant was made to the 42-unit Bowers Brook affordable senior apartment project on Ayer Road. Work there is “marching along,” said Nickerson. Ricci said a March 15 opening date is planned for that development.

Talk of affordable accessory apartment bylaw

The MAHT pondered, too, an approach to the Harvard Planning Board by year’s end to explore the drafting of zoning bylaw language that would permit the creation of affordable accessory apartments within single family homes and their accessory buildings. The accessory apartment bylaw passed Town Meeting four years ago. Such an “affordable” accessory option would likewise need voter approval at Town Meeting.

Cribbing from Carlisle’s bylaws, Brady said the necessary language is fairly straight forward and directly states what DHCD would require for such ‘affordability’ status for the units.

Harvard could cap how many units per year it would permit to be built under such an affordable accessory bylaw. “Look at the scale of the town and what you think might be reasonable and put a number there,” said Brady

“If you looked block by block, you’ll find a lot of accessory units,” said Ready, saying many homes already have them tucked into garages and barns. Brady agreed, and said the answer, atop codifying affordable accessory apartments and potentially offering incentives, may lie in offering an amnesty program for such units not “documented or approved.”

If the Planning Board wished to proceed, Ricci said draft language would be needed by February to provide for public hearings in mid March in advance of the April 28 Annual Town Meeting.